Coles shoulder: Wesfarmers hits sell on another $1.1b stake

The conglomerate's 13-year run at Australia's second biggest supermarket chain is all but over.

No mucking around: Wesfarmers boss Rob Scott has moved quickly to reduce the company's stake in Coles. Janie Barrett

No longer will it be listed as a substantial shareholder at the company, let alone have the right to sit in Coles' boardroom.

Wesfarmers' sell-down process, which started with a demerger in November 2018 and stepped up when it sold a 4.9 per cent stake last month, turned another leaf on Monday night.

Wesfarmers sold another 5.2 per cent stake for $1.1 billion to investment banks Goldman Sachs and UBS, as revealed by Street Talk, which were placing the stock with institutional investors as this column went to print.

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The sell-down reduced Wesfarmers' holding to a 4.9 per cent stake, taking it below the 5 per cent disclosure threshold.

It committed to hold the remaining shares for at least the next 60 days, but no one would be surprised to see it hit sell for a third time soon after.

Wesfarmers' time at Coles started with a bidding war and eventual $19.3 billion acquisition in 2007, and looks like closing with the supermarket giant doing record sales thanks to the COVID-19 outbreak.

Monday night's deal was priced at $15.39 a share, which was an 8.5 per cent discount to Coles' last close.

It was a win for investment banks Goldman Sachs and UBS, which beat their rivals to the pinch.

If there is one stock bankers would be confident they could get away in the current market it would be Coles, even after a similar-sized deal took some buyers out of the market in February.

Goldman Sachs and UBS were calling for bids by 8.30pm on Monday for local and Asian funds and by 2am Tuesday for offshore investors, according to terms sent to fund managers.

The 69.4 million shares are expected to cross on Tuesday morning.

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Sarah Thompson has co-edited Street Talk since 2009, specialising in private equity, investment banking, M&A and equity capital markets stories. Prior to that, she spent 10 years in London as a markets and M&A reporter at Bloomberg and Dow Jones. Email Sarah at sarah.thompson@afr.com

Anthony Macdonald co-edits Street Talk, specialising in private equity, investment banking, M&A and equity capital markets. He has 10 years' experience as a business journalist and worked at PwC, auditing and advising financial services companies. Connect with Anthony on Twitter. Email Anthony at a.macdonald@afr.com